Key ASEAN states expected to recover from slump
Key ASEAN states expected to recover from slump
SINGAPORE (AFP): Singapore's top bank has forecast that except for Indonesia, key ASEAN nations could recover from a slump and possibly register positive economic growth rates this year.
Except for Singapore which emerged with a positive 1.5 percent annual growth rate in 1998, all the top economies of the Association of Southeast Asian Nations (ASEAN) slipped into negative growth rates after grappling with a financial crisis.
The Development Bank of Singapore Ltd. (DBS), in its 1999 second quarter investment report, predicted a growth of 1.0-to- 2.0 percent for the Philippines and zero-to-1.0 percent for Malaysia in 1999.
It also forecast growth of minus 0.5-to-0.5 percent for Singapore, minus 1.0-to-zero percent for Thailand and minus 4.0- to-minus 3.0 percent for Indonesia.
DBS said Indonesia's fragile social fabric was plaguing economic reform efforts of the government, with political tensions heightening in the run up to the June national elections.
It forecast Indonesia's inflation rate falling from 58.5 percent last year to about 25 percent in 1999, with social tensions complicating the food distribution network and keeping up an upward pressure on food prices.
For Malaysia, DBS said an anticipated upturn of the global electronics industry by the second half of this year would be a welcome boost to recovery efforts.
The report noted substantial progress in Malaysia's banking reforms and said the country's ability to meet its total funding needs also looked more assured.
In addition, Malaysia's softening stance in capital controls could help nullify potential portfolio outflows, it said.
"We expect Malaysia to enter a period of consolidation this year," DBS said.
The Singapore bank said a GDP growth of 1.0-to-2.0 percent growth in 1999 for the Philippines should be within reach.
The Philippines' economic slowdown in 1998 was caused by both the regional crisis and unfavorable weather.
"The later is expected to abate by the second half of 1999, while the former will continue to drowse economic activity for the year," DBS said.
Revival in primary production, which account for around half of GDP, would ensure growth for the Philippines, it added.
For Thailand, DBS said a minus 1.0 percent-to-zero percent real GDP rise was still on the cards this year although some indicators such as the manufacturing production index should begin to show positive growth by the second quarter.
It cautioned that Thailand still needed to speed up its bank recapitalization to check private sector capital outflows and rise in non-performing loans.
On the home front, DBS said while external demand, particularly electronics exports, showed some signs of a pick up, Singapore's structural export competitiveness still lagged behind that of its Asian neighbors.